Warc Blog

Indian ecommerce reaches lower tiers

4 October 2013
MUMBAI: Indian ecommerce is reaching into fourth and fifth tier cities as internet access grows and as new retail partnerships and approaches are developed.

"The next story for online shopping is going to come from smaller towns in India," Manmohan Agarwal, chief executive of online retailer Yebhi.com, told Livemint.

"It is time to go beyond the tier II and III cities and go deeper into the real India where the consumer is waiting for us," he added.

For Agarawal, this was a recent insight, following Yebhi's tie up in July with the Indian Railway Catering and Tourism Corp to offer shopping services on the latter's website. The first order, for apparel and accessories, came from Chakradharpur, a railway town with a population of less than 200,000, since then Yebhi has seen a 12% rise in orders from tier IV and tier V cities.

Jabong.com, another online shopping website, has had a similar experience and now generates 50-60% of its sales from smaller towns. "These are not the top 45 cities, but the next rung after that," said founder Arun Chandra Mohan.

And Technopak, an advisory services firm, noted earlier this year that around half of sales for online sites came from cities and towns beyond the top eight metros.

Bricks and mortar retailers are also looking at using the online market to reach a previously untapped audience, including those without internet access or credit cards.

The Big Bazaar chain of outlets, for example, has developed a franchise model, Big Bazaar Direct, that see franchisees armed with tablets personally visit consumers and take orders for products for delivery within the next seven days.

"If it works it will be bigger than Big Bazaar," said Kishore Biyani, managing director of Future Retail, the owner of Big Bazaar.

Amid this enthusiasm for reaching into India's smaller towns, some observers cautioned that language was likely to be a major problem as much of ecommerce currently takes place in English. In Chakradharpur and the surrounding area, for example, eight major languages are spoken.

"Just because you are selling something at a 20% discount, the customer is not suddenly going to start learning English," remarked Rajiv Prakash, founder of e-commerce advisory firm NextiN.

Data sourced from Livemint; additional content by Warc staff

 
Envelope
EMAIL UPDATES

Sign up to Warc News – free daily bulletins on brand and market strategy, digital media and innovation


 

News content feedPrint